Understand Reverse Mortgages
2-4 hoursLearn HECM basics: borrow against home equity, no monthly payments, loan due when you move out or pass. FHA-insured with non-recourse protection.
Advanced2-4 weeks
Reverse Mortgage Guide
Free step-by-step reverse mortgage for home-rich cash-poor retirees. Plan reverse mortgage with calculators and checklists covering understand reverse.
home-rich cash-poor retireesages 62+ homeownersfinancial advisors evaluating options
Workflow
Evaluate Alternatives First
1-2 weeksCompare reverse mortgage against downsizing, HELOC, portfolio withdrawals, and cutting expenses. Reverse mortgage should be last resort, not first.
Calculate True Costs
4-8 hoursModel origination fees (2% HECM), mortgage insurance premiums, interest accrual, and impact on estate/heirs.
HUD Counseling and Decision
2-4 weeksComplete required HUD-approved counseling session. If proceeding, choose disbursement method: lump sum, line of credit, monthly payments, or combination.
Tools Used
- Mortgage CalculatorPrimary
Model reverse mortgage loan amount and accruing balance. · Calculate total fees and compound interest over projected tenure.
- Retirement CalculatorPrimary
Compare reverse mortgage income vs portfolio withdrawals.
- Budget CalculatorSupporting
Determine if reverse mortgage fills genuine income gap.
- Net Worth CalculatorReference
Assess impact on estate value for heirs.
Checklist
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Assessment
Analysis
Legal
Communication
Decision
Ongoing
Reference Materials
Reverse Mortgage vs AlternativesTable
Cost comparison for $300K home equity access.
| Option | Upfront Cost | Monthly Cost | Estate Impact |
|---|---|---|---|
| HECM line of credit | $10K-$20K | $0 (interest accrues) | Reduces inheritance |
| HELOC | $0-$2K | $800-$1,200 | Must repay |
| Downsize | $15K-$30K moving | Lower housing cost | Invest proceeds |
| Portfolio draw | $0 | Reduces portfolio | Preserves home equity |
HECM RequirementsStandard
Must be 62+, primary residence, no federal debt, HUD counseling completed, financial assessment passed. Home must meet FHA property standards. Spouse under 62 has protections but reduced borrowing amount.
Last Resort, Not First
Exhaust downsizing, part-time work, and portfolio optimization before reverse mortgage — fees and compounding interest are expensive.
Line of Credit Grows
Unused HECM line of credit grows at the loan interest rate — a $200K line can become $300K+ in unused capacity over 10 years.
Must Maintain Home
You still pay property taxes, insurance, and maintenance — failure to do so triggers loan default and foreclosure.
Safety Notes
- Reverse mortgage scams target seniors — only work with FHA-approved HECM lenders and complete HUD counseling.
- Failure to pay property taxes or maintain homeowners insurance triggers loan default — the lender can foreclose.